Stock Market Falters Amid Political Tensions and IMF Uncertainty

Karachi: The stock market faced significant pressure this past week as investors remained cautious due to political uncertainty arising from tensions between the government and its coalition partners. The departure of an International Monetary Fund mission without reaching a staff-level agreement further dampened sentiment, although the mission chief noted significant progress with plans to continue discussions in Washington. The benchmark index experienced a decline, dropping by 5,891 points, or 3.49%, to close at 163,098 points.

Market participation also saw a decline, with the average daily traded volume falling by 7.6% week-on-week to 1.6 billion shares, down from 1.8 billion shares the previous week. On the macroeconomic front, the National Accounts Committee revised Pakistan’s GDP growth estimate for the fiscal year 2025 upward to 3.04%, compared to the earlier provisional figure of 2.68%.

In terms of foreign exchange, worker remittances amounted to $3.2 billion in September 2025, marking an 11% increase year-on-year. The State Bank of Pakistan’s foreign exchange reserves rose by $20 million week-on-week, ending the week at $14.4 billion as of October 3rd. The Pakistani Rupee appreciated slightly by 0.03% against the U.S. dollar during the week, closing at 281.17 PKR/USD.

Looking ahead, analysts from AKD Securities Limited anticipate continued momentum in the KSE-100 index, supported by the smooth completion of the IMF’s second review and improved credit ratings from global agencies. Investor sentiment is expected to improve further with potential foreign investment flows, driven by better relations with the United States and Saudi Arabia. The lack of alternative investment avenues and attractive valuation of local equities, with the KSE-100 trading at a multiple of 7.4x and offering a dividend yield of 6.6%, also support a positive outlook. Top stock picks include OGDC, PPL, PSO, FFC, ENGROH, MCB, LUCK, DGKC, FCCL, INDU, and SYS.